Cost of Borrowing in Kenya: CBK Data Ranks Banks from Cheapest to Most Expensive
The Central Bank of Kenya (CBK) has spilled the beans on just which banks offer the cheapest and costliest personal loans – a move that’s potentially about to give Kenyans a new perspective on the country’s lending landscape.
According to CBK’s analysis on the cost of credit – which looked at 33 commercial banks – Habib Bank AG Zurich turned out to be the cheapest option out there, while Sidian Bank topped the list of the most expensive for a standard KSh 100,000 loan taken out over 12 months.
Housing Finance Corporation, ABC Bank, & Standard Chartered Bank are among the options that are actually pretty reasonable for borrowers. On the flip side, Guardian Bank and Access Bank Kenya follow right behind Sidian as the most expensive options you’ll find for similar loans.
The difference in costs is pretty staggering for borrowers. If you take out a KSh 100,000 loan from Habib Bank AG Zurich, you could end up paying back KSh 112,750 – all of which is based on a 12.75% annual interest rate and no extra charges whatsoever.
On the other hand, the same loan from Sidian Bank would cost a total of KSh 131,100 . That total includes KSh 16,220 in interest, KSh 12,400 in bank charges and KSh 2,480 in other charges you might have to pay.
| Lender | Cost of borrowing KSh 100,000 |
| 1. Habib Bank AG Zurich | KSh 12,750 |
| 2. Housing Finance Corporation | KSh 13,000 |
| 3. ABC | KSh 14,750 |
| 4. Stanchart | KSh 15,000 |
| 5. Paramount Bank | KSh 15,380 |
| 6. Equity Bank | KSh 23,785 |
| 7. Middle East Bank | KSh 23,980 |
| 8. Access Bank | KSh 24,780 |
| 9. Guardian Bank | KSh 28,050 |
| 10. Sidian Bank | KSh 31,000 |
Although Middle East Bank is pricing its loan at the maximum annual rate of 23.98%, it’s not adding on any extra fees – which brings the total repayment to KSh 123,980 still cheaper than Sidian’s offer.
For whatever it’s worth, lenders aren’t making any distinction between secured and unsecured personal loans when it comes to their prices – that’s according to the KBA website.
The CBK’s latest findings come at a time when commercial banks are under a lot of pressure to lower interest rates, following eight straight rate cuts under the CBK’s new policy. The benchmark rate has come down from 13% in August to just 9.25% now.
But even despite all the easing, credit growth in the private sector is still pretty slow, creeping up only slightly to 5% by the end of September. And even though average lending rates among commercial banks came down a fraction from 15.2% in August to 15.1% in September, they’re still hanging well above the CBK’s policy rate.
Also Read: New Bill Proposes Sh5 Million Fine or 10-Year Jail Term for Fake Miracles and Extortion
Cost of Borrowing in Kenya: CBK Data Ranks Banks from Cheapest to Most Expensive